Mongolia's external economic outlook is dramatically changing as it faces sharp reductions in the copper price, caused by the financial crisis and global downturn. This compels the government now to drastically cut spending to prudently manage the budget. The budget is extremely dependent on mining revenues. Government is taking the right step in proposing a balanced budget for 2009. But further adjustments will be needed given the continuing fall in copper prices. A prudent fiscal stance will also be needed to manage inflation, which accelerated in the past year to over 30 percent. The current situation highlights the need to manage mining revenues better than in recent years. Mongolia saved little during the boom years, but instead dramatically increased expenditures on wages and salaries, and poorly-targeted social transfers. Adopting a multi-year fiscal framework-which enforces saving during the boom years, sets limits to expenditure growth and debt, and ensures transparency to the public-can help. Since much of the past windfall revenues have been spent, the country enters the down-turn with little savings and high inflation, forcing it to cut expenditures with every drop in the copper price. To avoid such situations in the future, the government has the opportunity to adopt a transparent, multi-year budget framework for expenditures and investment. This includes adopting a new fiscal responsibility law. It will ensure that the government saves during the 'boom' years, so that it can continue to spend during the 'bust' years. It will also set limits to expenditure growth and public debt. Within the limits set by this framework, parliament can then exercise its constitutional rights to amend the budget.
Detalhes
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Data do documento
2009/01/02
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TIpo de documento
Avaliação fiduciária integrada
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No. do relatório
43353
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Nº do volume
2
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Total Volume(s)
2
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País
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Região
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Data de divulgação
2009/02/05
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Disclosure Status
Disclosed
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Nome do documento
Annexes
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Palavras-chave
Public Expenditure and Financial Management Review;average wage;private good;rate of change;Poverty Reduction & Economic Management;Association of Southeast Asian Nations;transaction cost;years of service;market failure;loss of work capacity;civil service reform strategy;Vocational and Technical Education;needy student;annex annex;backup tape;hard drive;payment data;access right;capacity loss;financial policies;internal control;internal control system;number of survivors;enforcement of law;higher education institution;Civil Service Employment;civil service job;average monthly salary;civil service law;private sector wage;civil service system;public pay scale;total wage bill;wage bill share;share of wage;families with income;human resource requirement;
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